Affiliated Common Value Auctions with Differential Information: The Two Bidder Case

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Affiliated Common Value Auctions with Differential Information: The Two Bidder Case

Author Info

Sergio Parreiras (University of North Carolina, Chapel Hill)

Abstract

I study affiliated, pure common-value auctions with ex-ante asymmetric buyers. For the two-buyer case I characterize and prove uniqueness of the equilibrium of hybrid auctions where the payment is a weighted average of the highest and second-highest bids. A recursive method to explicitly compute the equilibrium is presented. It is shown that any hybrid auction yields at least as much revenue as the first-price auction. In particular, the equilibrium of the second-price auction, obtained in the limit by letting the weight of the highest bid go to zero, revenue-dominates the first-price auction.

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Article provided by Berkeley Electronic Press in its journal Contributions to Theoretical Economics.

Volume (Year): 6 (2006)
Issue (Month): 1 ()
Pages: 1304-1304
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Handle: RePEc:bep:thecon:v:6:y:2006:i:1:p:1304-1304

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Find related papers by JEL classification:
D44 - Microeconomics - - Market Structure and Pricing - - - Auctions

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Other versions:
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Other versions:
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